Suppose that a specific tax of $3 is imposed on consumers of bread. The bread market supply is Qs = 10 + 0.5P and the bread market demand is Qd = 100-P. What is the consumers’ tax burden? A) Consumers’ tax burden is $1.30. B) Consumers’ tax burden is $1.00. C) Consumers’ tax burden is […]
Date: September 9th, 2020
In the case of a specific tax, tax incidence is independent of who pays A) only when supply and demand elasticities are not constant. B) only when the tax is collected from consumers. C) in most but not all cases. D) in all cases. ANSWER D
Date: September 9th, 2020
In the case of a specific tax the resulting price received by producers depends on A) who pays the tax. B) the price elasticity of supply. C) the price elasticity of demand. D) All of the above. ANSWER D
Date: September 9th, 2020
Explain why short-run demand for frozen fish sticks may be more price elastic in the short run than in the long run. What will be an ideal response? ANSWER Frozen fish sticks can be stored. If frozen fish sticks go on sale you can buy large quantities and store them in your freezer. Thus, […]
Date: September 9th, 2020
To prevent obesity, the government may establish a tax on high caloric foods, such as twinkies. A twinkie tax will have the smallest impact on quantity demanded when the demand curve for twinkies is A) perfectly elastic. B) perfectly inelastic. C) more elastic than the supply curve. D) both A and B. ANSWER B […]
Date: September 9th, 2020
The short-run elasticity of supply is less than the long-run elasticity of supply A) because consumers’ tastes and preferences change in the long run but not in the short run. B) because producers can adjust the amount of machinery in the long run but not in the short run. C) only for durable goods. D) […]
Date: September 9th, 2020
As more people quit smoking in the United States, what is expected to happen to the price elasticity of supply of cigarettes? A) It will decrease. B) It will increase. C) It can increase or decrease. D) It will not change. ANSWER A
Date: September 9th, 2020
Consider Sam and Linda both drive a relatively inefficient sport utility vehicle (SUV). Sam has a lease that doesn’t expire for three years whereas Linda owns her sport utility vehicle free and clear. If the price of gasoline was to increase by fifty percent, which of these statements is most likely TRUE? A) Linda will […]
Date: September 9th, 2020
The short-run price elasticity of demand for refrigerators is relatively inelastic. Indicate whether the statement is true or false ANSWER False. People can put off buying a refrigerator in the short run. Therefore demand is elastic in the short run.
Date: September 9th, 2020
In the mid-1980s, the salaries of accounting professors with Ph.D.s increased dramatically. This resulted in an increase in enrollments in Ph.D. accounting programs. Since a Ph.D. degree in accounting may take at least four years to complete, the short-run elasticity of supply of accounting professors is A) greater than the long-run-elasticity of supply. B) less […]
Date: September 9th, 2020
